Chinese markets rallied Wednesday on speculation that Beijing was about to announce a new incentive to boost the country's sagging property market.
Elsewhere, Asian equities ended lower on Wednesday as sentiment remained shaky in the region, with investors awaiting more regional data, as well as the key November non-farm payroll number from the U.S. on Friday.
Shanghai Composite rallies on rumored property market incentives from Beijing
The Chinese benchmark saw another surge in afternoon trade on speculation that Beijing would make mortgage interest payments tax deductible in order to stimulate China's property market,
The closed 80 points, or 2.3 percent, higher at 3,537, boosted by a surge in blue-chip shares; the smaller Shenzhen Composite and tech-heavy Chinext saw losses of 0.4 and 2 percent, respectively, while the blue-chip heavy CSI 300 Index was up 3.61 percent.
Property stocks made strong gains both on the mainland and in Hong Kong. Shares in Vanke and Poly Real Estate closed 10 percent higher; shares in China Resources Land and Longfor Properties, listed on the Hong Kong Stock Exchange, were up 3.3 and 1.84 percent.
Chinese brokerages and banks also rallied strongly on the back of the reports in Chinese media of tax-deductible interest payments - Citic Securities was up 6 percent, Haitong Securities up 5.16 percent, and Huatai Securities up 6.12 percent. More generally, banking stocks traded between 3.5 and 5 percent higher.
Chinese energy plays also gained, despite a fall in oil prices. In Asian trade, U.S. WTI crude price was down 22 cents, or 0.53 percent, to $41.63 a barrel while the internationally traded Brent was 18 cents, or 0.41 percent, lower at $44.27 a barrel.
Away from the mainland, the closed 0.44 percent higher at 22,479.
The banks were part of a stress test conducted by the Bank of England to measure the readiness of seven banks to deal with a severe financial meltdown in Chinese and Hong Kong markets. Both banks passed the test but Standard Chartered was the weakest among the seven.
Gaming stocks in Hong Kong were mostly up in the afternoon, but shares in Wynn Macau remained in the red, closing down 0.3 percent. On Tuesday, Macau, which is one of the premier destinations for casinos and gaming in the region, reported that November gaming revenue fell 32 percent on-year to $2.1 billion, the 18th consecutive month of decline.
Elsewhere, a non-executive director at pharmaceutical company Sihuan Pharmaceutical was arrested by Hong Kong's Independent Commission Against Corruption and subsequently released without charge. Trading in the company's shares was halted during the morning session.
Nikkei fails to stay up in the 20,000 bracket
Japan's equity market could not maintain the previous day's momentum. The index slipped 74 points, or 0.37 percent, falling under the 20,000 benchmark.
Shares in Sharp closed 3.17 percent higher, trimming gains from the morning session. Japanese state-backed fund Innovation Network Corporation of Japan (INCJ) said it was considering buying a majority stake in Sharp, according to a report by Yomiuri newspaper. The deal was estimated to be worth 200 billion yen ($1.63 billion).
The report added as part of a restructuring process, INCJ might ask for the resignation of senior management at the troubled electronics company, including its chief executive and president Kozo Takahashi.
Japanese automakers traded mixed, most shares trimming early gains to trade flat or in the red. Shares in Toyota closed 0.8 percent higher after the international automaker received a boost in investor confidence from higher auto sales in the U.S.
Korean market back in the red
The Kospi was down 15 points, or 0.7 percent, at 2,009 as investor appetite continued to be dragged down by the unfavorable macro environment.
Data released earlier in the week showed exports for November fell and there was an uptick in inflation. Reports said the minutes of the Bank of Korea's November 12 meeting, released late Tuesday, suggested some members of the policy board were uncertain if economic recovery initiatives were working.
ASX closed lower even as GDP beat expectations
The ASX 200 closed down 6 points, or 0.12 percent, at 5,260, even as Australia's third quarter gross domestic product (GDP), the broadest measure of economic health, beat expectations.
Third quarter GDP was up 2.5 percent on-year, beating expectations of 2.4 percent growth, according to a Reuters poll. Real GDP was up 0.9 percent on-quarter, also beating expectations of 0.8 percent.
Savanth Sebastian, equities economist at Commonwealth Securities, told CNBC's "Asia Squawk Box" it was no surprise that net exports were the biggest driver of growth.
"We are also seeing that household consumption has made a return to strength. And I think that's a very very big positive to see that strength, in terms of household consumption. Dwelling investments was probably another one of the key drivers that we saw in the result that supported the growth story," he said.
Among the negatives, Sebastian said a fall in previous quarter's business investment had an impact on "curbing what could've been a stronger growth."
Resources producers had a much more mixed session, weighed by lower commodities prices, particularly iron ore.
Evan Lucas, chief market strategist at spreadbetter IG, noted that it was "a new decade low for iron ore last night at US$42.27 a tonne. It's motoring towards US$40 a tonne." Other industrial metals, he added, saw marginal gains in prices.
Gold miners closed the session mostly positive but Kingsgate saw a steep decline of 6.6 percent. Gold traded 0.13 percent lower at $1,067 an ounce in Asian trade.
Overnight, U.S. stocks closed nearly 1 percent higher on Tuesday despite a survey showing a decline in manufacturing activity in the economy. The ISM U.S. November Manufacturing Purchasing Managers Index (PMI) came in at 48.6, in contraction territory and below the 50.5 reading expected by economists. The print was the worst since June 2009 and the first time the index has fallen below 50 in three years.
The closed up 168 points, or 0.95 percent, at 17,888; the S&P 500 saw gains of 22 points, or 1.07 percent, to 2,103; while the was up 48 points, or 0.93 percent, to 5,156.